frequent flier programs

Delta SkyMiles rewards will be tied to demand

delta plane

For a story on NBC News, I had a chance to dig into the debate over the latest changes coming to Delta Air Lines SkyMiles frequent flier program.

Here’s a rundown of some of the changes and some expert takes on the carrier’s move:

Next June, Delta Air Lines becomes the first of the “big three” U.S. airlines to ditch the classic fixed miles-for-a-free-flight system in favor of a supply-and-demand scheme that, in many case, will likely require more mileage points to fly on more popular routes or at the last minute.

JetBlue, Southwest and Virgin America already offer this type of award program.

Delta announced the change by saying that “the number of miles needed (for a free flight) will change based on destination, demand and other considerations,” beginning on June 1, 2016.

Other changes take effect immediately.

Delta spokesman Anthony Black said “most award prices will stay the same, with a greater availability of awards at the lowest prices and some new 7,500 and 10,000 mile one-way awards. Members can take advantage of lower prices immediately, while other price changes won’t take affect for travel more than 10 months from now.”

While some changes should make it easier for passengers to access award seats, others may increase the amount of miles needed to purchase upgrades or tickets.

Many frequent fliers and point watchers have taken issue with some of the changes and the amount of information shared with customers.

“Delta will now determine demand and other factors to determine how many miles are required, in the same way that it uses those factors to determine the price of a paid ticket,” said Scott Mackenzie of Travel Codex.

Delta has removed the award chart from its site and that reduction in transparency will mean Delta customers will have a hard time determining if they’re getting a good value for their frequent flier miles, said travel industry analyst Henry Harteveldt of the Atmosphere Research Group.

Travelers may end up having to use more miles to fly popular routes at the last minute, but there may be times when the new plan works in favor of the consumer.

“If demand is soft to a particular destination,” said Harteveldt, “The cheapest tickets may be put on the market for less than the minimum 25,000 points that we have today.”

Travelers irritated by the change have vowed to stop by flying Delta.

But “the value of a frequent flyer mile is dependent on demand,” said Chris McGinnis of TravelSkills.com.

“Once demand falls off, Delta will use the SkyMiles program to woo us back with added value and perks. We just have to be patient.”

Travel tune-up: re-thinking airline loyalty programs

Photo from UW Digital Collections, via The Commons on Flickr

Photo from UW Digital Collections, via The Commons on Flickr

About 25 million people had plans to travel by air this Thanksgiving weekend and, as they return from their holiday, some are already making travel plans for 2015 using the frequent flier miles they earned from airline loyalty programs this past year.

But changes in some of those programs might make some travelers rethink their allegiances now.

Alaska Airlines will begin offering increased mileage bonuses for a number of fare classes and elite Mileage Plan members. Starting January 1, the airline will be offering big mileage bonuses to first class, refundable coach and MVP Gold upgradeable travelers.

Both Delta Air Lines and United Airlines are joining the fray by upping the antes for flight miles and elite programs, through a mix of cash spend and frequent flier miles.

Beginning January 1, 2015 the cash spend required for reaching various levels of Premier status on United Airlines in 2016 will be raised. And starting March, 2015, United passengers will earn award Mileage Plus frequent flier miles based on an equation that takes into consideration ticket price and frequent flier status instead of actual miles flown.

As of January 1, 2015, Delta Air Lines SkyMiles members will earn miles based on ticket price and elite program status as well and, as these charts outline, the cash spend for reaching for reaching various Medallion levels is increased as well.

Various websites (many of which earn commissions from promoting mileage-linked credit cards) parse the minutiae of the airline mileage rules but “come next February, I think a lot of people are going to drop status because of these changes,” said Brian Kelly, founder of ThePointsGuy.com. “Even though they may have flown the same amount as the year before, they most likely won’t hit the revenue requirements.”

It may be more difficult to accrue elite status, but United and Delta have still rolled out some helpful all-access perks.

In August, Delta introduced Delta Studio, which offers movies, TV episodes, music, games and other free entertainment options on all of its domestic aircraft and two-cabin regional jets.

Just this week, United expanded its free on-board wireless video streaming to Android devices, and will also offer bonus mileage incentives to smartphone app users via MileagePlus X.

And, as part of a major make-over underway at United’s hub at Newark Liberty’s Terminal C, passengers will be able to use Mileage Plus award miles to pay for purchases in restaurants and stores via the 6,000 iPads OTG Management is installing as part of the project.

In the second quarter of 2015, American Airlines’ AAdvantage and US Airways Dividend Miles members will become part of the same frequent flyer program.

Mileage balances will be combined, elite levels will be aligned and a new upgrade policy for elite status members flying on American and US Airways will be put in place.

Do you want to check luggage with that ticket?

In the first half of 2015, JetBlue will launch a three-tiered flyer program that will allow some passengers to get up to two pieces of luggage checked for free, along with other incentives.

Meanwhile, Hawaiian Airlines will offer its travelers the option of earning travel miles “based on distance flown, not based on ticket spend and Elite status,” spokeswoman Alison Croyle told CNBC. “The airline will also not require any minimum spend to make elite status.”

Based on the host of incentives and upcoming changes, airline watchers say passengers need to decide whether certain loyalty programs are worth keeping.

Elite status is becoming harder to earn and less valuable, at least at the mid and lower tiers,” said ThePointsGuy’s Kelly.

“So you need to identify what you want out of your program,” he added. “Calculate how much extra you pay for your loyalty and see if you’re receiving more than that back in perks and the value from miles. If not, then it may be time to switch.”

(My story about airline loyalty programs first appeared on CNBC in a slightly different version.)

Swap unwanted gift cards for miles on United Continental

Even novice players of the airline mileage-program game know how to earn extra frequent flier miles through shopping, dining, hotel stays and car rentals.

Now there’s one more way to feather the free-trip nest: On Monday, United Continental Holdings launched the MileagePlus Gift Card Exchange, a program that allows members of United and Continental airlines’ MileagePlus program to swap unwanted gift cards from more than 60 major retailers for miles.

“The program enables members to get value out of gift cards that they normally wouldn’t use or didn’t want,” said United spokesperson Charles Hobart. The airline claims the program is the “first of its kind.”

To swap cards, MileagePlus members log into their accounts and enter the value and other information from an unwanted gift card. The site will verify the card, make an exchange offer in miles and, if the offer is accepted, “take” the card and, within about five days, deposit miles in a member’s account.

There are some restrictions: Cards with balances below $25 will not qualify, nor will cards that have expiration dates. And not all cards will be accepted or exchanged for face value. “Our rates are determined by market pricing, which is affected by several factors,” the program rules state. Those factors determining a card’s value aren’t fully spelled out and the rules note that the mileage offer displayed for the same gift may fluctuate over time.

“This looks like a modest win for MileagePlus members, who now have yet another option for using their miles,” said Tim Winship, publisher of FrequentFlier.com, a site about airline-mileage programs. “But without a set exchange rate when converting card balances into frequent flier miles, it’s impossible to assess the real value of such exchanges except on a case-by-case basis.”

Winship says that floating exchange rates will likely detract from the new feature’s popularity, as could the 7.5 percent federal excise tax he suspects will show up as a reduction in the number of miles members receive for any exchange.

“If the exchange rates are generous enough, the tax hit may not matter,” said Winship. “But for those drawn to the program for its convenience, it’s probably a non-issue” and will likely be a feature other airlines and hotels may soon add to their programs.

(Note: an earlier version of this story appeared on msnbc.com Travel’s Overhead Bin)